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Transformco

From Alfawiki
Transform SR Brands LLC
Company typePrivate
IndustryRetail
FoundedFebruary 11, 2019; 7 years ago (2019-02-11)
FounderEddie Lampert
Headquarters
Hoffman Estates, Illinois
,
United States
Area served
Mainland United States, Puerto Rico, Guam, U.S. Virgin Islands
Key people
Eddie Lampert (Chairman), Neeraj Karhade (CFO)
ProductsBig-box and department store retail
OwnerESL Investments
Number of employees
45,000 (2019)

Company Overview

Transform SR Brands LLC, operating under the trade name TransformCo and sometimes called "New Sears," is a privately owned American enterprise established on February 11, 2019. The company was created to acquire certain assets from the former Sears Holdings Corporation. Ownership of TransformCo rests with ESL Investments. Following Sears Holdings' Chapter 11 bankruptcy filing on October 15, 2018, TransformCo completed the purchase of the remaining assets of Sears Holdings for $5.2 billion.

Background and Formation

TransformCo was founded by Eddie Lampert and is headquartered in Hoffman Estates, Illinois, United States. It operates within the retail sector, focusing primarily on big-box and department store formats. The company serves multiple regions including the mainland United States, Puerto Rico, Guam, and the U.S. Virgin Islands.

Leadership and Workforce

Key executives at TransformCo include Chairman Eddie Lampert and Chief Financial Officer Neeraj Karhade. As of 2019, the company employed approximately 45,000 individuals.

Subsidiaries and Acquisitions

The firm’s subsidiaries encompass Kmart, Sears, and formerly Sears Hometown Stores (held from 2019 until 2022). On June 3, 2019, TransformCo announced plans to acquire Sears Hometown and Outlet Stores. This acquisition required Sears Hometown to potentially divest its Sears Outlet division to secure regulatory approval.

Sears Holdings

Main article: Sears Holdings § History

On November 17, 2004, Kmart Holding Corporation's leadership declared their plan to acquire Sears, Roebuck and Co. through the establishment of a new entity.[1] Having emerged from Chapter 11 bankruptcy on May 6, 2003, Kmart joined forces with Sears under the newly formed Sears Holdings Corporation, commonly referred to as Sears Holdings. This new entity declared it would maintain operations under both the Sears and Kmart banners. The merger finalized on March 24, 2005, following affirmative votes from shareholders of both companies. Post-merger, Kmart along with its parent company Kmart Holding Corporation and Sears became subsidiaries under Sears Holdings Corporation. Sears Holdings then managed the operations of both the Sears and Kmart stores while continuing to sell products under each brand’s portfolio. The transaction received regulatory clearance and shareholder approval before completion on March 24, 2005.[2] At the time of consolidation, the combined enterprise operated roughly 3,500 retail locations.[3]

Eddie Lampert served as the company’s leader for thirteen years following the merger. (Refer to Sears Holdings#History for a comprehensive timeline of subsequent events.)

Reports surfaced on October 10, 2018, indicating that Sears Holdings had engaged financial advisors in anticipation of an imminent bankruptcy filing.[4][5]

On October 15, 2018, Sears Holdings officially filed for Chapter 11 bankruptcy protection in New York coinciding with a $134 million debt payment deadline.[6]

Simultaneously on October 15, Sears Holdings revealed plans to shutter a total of 142 outlets—comprising 63 Kmart stores and 79 Sears locations.[6][7] This filing also represented Kmart’s second bankruptcy occurrence within a sixteen-year period. On November 8 of that year, an additional closure announcement was made affecting forty more stores—eleven Kmarts and twenty-nine Sears outlets.[8] Later on November 23, Sears Holdings published a list identifying five hundred five stores—239 Kmarts and 266 Sears locations—put up for sale during bankruptcy proceedings while other outlets commenced liquidation sales.[9] It should be noted that stores listed for sale were not assured protection from future liquidation. On December 28 of the same year, an additional eighty store closures were announced including thirty-seven Kmarts and forty-three Sears outlets.[10]

In early January proposals surfaced indicating that Sears Holdings intended to maintain only about two hundred two Kmart stores alongside two hundred twenty-three Sears locations if it successfully navigated bankruptcy. Most remaining outlets were situated in densely populated coastal markets.[11]

As of January 15, when liquidation under Chapter 7 appeared imminent for Sears Holdings, a bankruptcy judge mandated renewed negotiations with Eddie Lampert, aiming to avert complete liquidation. A last-minute agreement was reached preserving operations at approximately four hundred Sears and Kmart stores.[12] Subsequently on January 19 that year, Sears Holdings confirmed winning the auction process which would allow some existing stores to continue operations.[13]

On January 24 a coalition of unsecured creditors including Simon Property Group filed a motion with the bankruptcy court seeking to overturn the agreement between Sears Holdings and Lampert. They accused Lampert of conducting "serial asset stripping" detrimental to suppliers and landlords. The creditors advocated for liquidation rather than reorganization in hopes of recovering greater sums owed.[14] On January 28 the federally managed Pension Benefit Guaranty Corporation expressed opposition to the prevailing agreement with Lampert due to a projected $1.7 billion shortfall in employee pension funding that would potentially require taxpayer intervention.[15] Court documents filed February 1 revealed ESL’s intentions to shutter three Kmart locations monthly throughout that year if its purchase bid received court approval.[16]

In February 2019 a U.S. bankruptcy judge sanctioned the sale of the most valuable segment of Sears Holdings to Edward Lampert. This allowed the remaining business operating both Sears and Kmart brands to persist despite financial detriment experienced by suppliers, landlords, employees including pensioners as well as governmental entities and other creditors. Following this transaction’s conclusion Kmart was projected to operate approximately two hundred two outlets.[17]

Formation of Transformco

In February 2019, Transformco completed the purchase of 425 retail locations—comprising 223 Sears and 202 Kmart stores—from Sears Holdings for $5.2 billion. Locations not acquired by Transformco were promptly liquidated. During Sears Holdings' bankruptcy proceedings, ESL, the parent entity overseeing both the former and restructured Sears, informed the court that it intended to close three Kmart outlets monthly throughout 2019 if its acquisition bid was approved.

By June 2019, customers of Sears reported difficulties in obtaining warranty service for products previously bought from the retailer.

Ongoing Store Closures and Asset Downsizing under Transformco

On August 6, 2019, Transformco revealed plans to shutter 26 stores in October, including five Kmarts and 21 Sears locations, which would leave approximately 380 stores operational. Later that month, on August 31, an additional announcement detailed the closure of 92 more stores by year-end—77 Kmarts and 15 Sears outlets.

Further reductions were announced on November 7, 2019, with plans to close another 96 stores by February 2020. This included 45 Kmart and 51 Sears stores, ultimately leaving around 70 Kmart locations across 19 states plus Guam, Puerto Rico, and the U.S. Virgin Islands, alongside 123 Sears stores. Reports from November indicated that following these closures, about 182 full-line Sears and Kmart stores would remain.

In December 2019, Transformco sold the DieHard brand to Advance Auto Parts for $200 million. Under this arrangement, Sears and Kmart retained rights to sell DieHard batteries in their outlets, while Advance Auto Parts obtained exclusive ownership of the brand within automotive products and services.

On February 6, 2020, Transformco announced plans to close an additional 15 Kmart and 26 Sears stores around April of that year. Throughout June and July 2020, listings on Sears’ employment website suggested over twenty more store closures were underway.

In December 2021, Transformco declared intentions to sell the Sears corporate headquarters located in Hoffman Estates. The property was eventually purchased by a data center developer during summer 2023, with demolition of existing structures scheduled for fall that year. Details regarding the fate of headquarters personnel were not publicly disclosed.

In early 2022, it was confirmed that Pennsylvania's last full-line Sears store in Abington Township would be closing. On January 21, the final Searstown location in Fort Lauderdale, Florida closed abruptly without prior notice or liquidation events.

Later in August 2022, it was announced that the Sears store at Newburgh Mall would cease operations in fall 2022. This marked the end of a significant era as it was both the mall's last original anchor and New York State’s final Sears department store. The closure date was confirmed as Sunday, October 16, 2022.

On September 22, it was revealed that the Sears outlet at Valley Mall in Union Gap, Washington would close by November 20. The following day brought news of the Burbank Town Center Sears location closing on the same date; this was notable as it was the last original anchor from its opening in 1991 and the final mall-connected Sears in Greater Los Angeles.

By mid-October 2022, Transformco announced that Puerto Rico’s sole remaining Kmart at Plaza Las Americas would shut down by month’s end.

Maryland saw its last Sears store at Francis Scott Key Mall close on January 15, 2023. In March of that year, Miami’s Kmart downsized its footprint and relocated within its building to accommodate a new tenant specializing in home décor. April brought news that North Carolina’s final Sears store would close by May’s end. In June, reports confirmed closure plans for a Kmart at Sunshine Mall in St. Croix. Then in August, it was announced New Jersey’s last Kmart would cease operations on September 30.

Although Sears Holdings officially emerged from Chapter 11 bankruptcy on October 29, 2022, this entity no longer held physical assets since divesting its stores to Transformco in February 2019 and does not influence Transformco’s current operations; thus, the two companies operate independently.

Transition to a Commercial Real Estate Enterprise

In a June 2023 discussion, Scott Carr, president of real estate at Transformco, described the company’s strategic shift from functioning primarily as a retailer with real estate assets to evolving into a dedicated real estate operating firm. Previously, Carr emphasized that Transformco is actively seeking ways to maximize value from its property holdings while collaborating with retailers, property owners, and local communities as part of its broader retail real estate transformation.

In 2021, Transformco took ownership of a previously leased but now vacant site formerly occupied by a Kmart on Long Island. After making enhancements to the property, the company successfully leased space to three distinct tenants: Aldi, At Home, and Floor & Decor.

By 2022, Transformco entered into a collaboration with Russo Development, a New Jersey-based developer, to construct 530 rental apartments and 190 units for sale on the location of a former Sears store in New Brunswick, New Jersey. This project is slated for completion by 2027 and will also feature a grocery store and dining establishment as part of the development.

Sears Hometown Stores

On June 3, 2019, it was announced that Transformco planned to acquire Sears Hometown and Outlet Stores. As part of this transaction, Sears Hometown was expected to divest its Sears Outlet division to comply with regulatory requirements. At that time, Sears Hometown and Outlet Stores operated 491 Hometown locations and 126 Outlet stores across 49 states, Puerto Rico, and Bermuda. Nearly all (98%) of the Hometown stores were independently owned franchises.

The sale of the Sears Outlet division to Franchise Group, Inc. was finalized on October 23, 2019. On the same day, Transformco completed its acquisition of the remaining Sears Hometown stores. At acquisition, Sears Hometown operated approximately 414 locations.

In January 2020, The Wall Street Journal reported challenges faced by Sears Hometown franchisees in obtaining inventory from Transformco. Additionally, franchisees encountered penalties when attempting to match prices offered on Sears.com.

By May 2022, Chain Store Age reported that around 100 Sears Hometown stores were in the process of closing.

In December 2022, Sears Hometown Stores, Inc. filed for Chapter 11 bankruptcy protection and announced plans to liquidate inventory across all 115 remaining stores. Eddie Lampert was identified as holding a 37.75% ownership stake in Sears Hometown during these proceedings. Shortly after the bankruptcy filing, both the Sears Hometown Stores and Sears Home Appliance Showroom websites were taken offline.

Subsidiaries

Main articles: Kmart and Sears

Kmart division

Sears division

  • Sears – a department store chain primarily situated within shopping malls, with several standalone locations as well. By December 2024, only 8 full-line Sears department stores continue to operate.[19] These outlets provide traditional mid-range department store merchandise along with an expanded selection of appliances and tools.
    • Sears Home Services – Sears’ service division focused on appliance repairs, lawn and garden maintenance, HVAC servicing, and various in-home services. In July 2020, Transformco announced it was considering selling this home improvement segment due to interest from prospective buyers.[20]
    • Sears Parts Direct – a retail chain specializing in parts for lawn and garden equipment as well as appliances. Certain locations branded as Sears Parts and Repair Centers serve as drop-off points for customers requiring repairs on items covered by warranty or otherwise.Template:Fix/category[clarification needed]

Other subsidiaries

Kmart division

  • Kmart – The company discontinued or divested the following segments:
    • Big Kmart stores – This was a discount department store chain offering the typical Kmart merchandise but with a stronger focus on home furnishings, children's apparel, and additional grocery items. Although the Big Kmart format has long been phased out, many Kmart locations continued to display Big Kmart signage for an extended period after adopting the updated Kmart logo, until those stores eventually closed.
    • Super Kmart Center – These supercenters merged a standard Kmart store with a comprehensive grocery section akin to Walmart. Numerous sites featured on-site auto centers and Kmart express fuel stations. The last operating Super Kmart Center was in Niles, Ohio, which ceased operations in 2018.
    • KGRO – This brand was exclusively used within the Garden Shop areas of Kmart stores. Initially associated with garden and power equipment, KGRO later became the label for Kmart’s fertilizers and seed products.
    • K-Fresh – Implemented in select Super Kmart Center locations, this format expanded the grocery offerings by creating a store-within-a-store grocery experience.
    • mygofer – Launched in spring 2009, this hybrid online retail initiative allowed customers to place orders in advance for either shipment or pickup at local Kmart stores. The service quietly ended in 2020 following widespread closures of Kmart outlets.

Sears division

  • Sears – The following divisions were either shut down or sold off by Sears:
    • Sears Grand – A sub-brand of Sears stores typically situated outside traditional mall settings and designed similarly to big-box retailers. Many Sears Grand locations were remodeled versions of former standalone Kmart or Sears stores. These stores offered a broader product selection than standard Sears Department Stores and ranged from approximately 165,000 to 210,000 square feet (15,300 to 19,500 m2). The penultimate Sears Grand store in Thornton, Colorado closed on May 2, 2021; the final location in Rancho Cucamonga, California closed shortly thereafter on May 15, 2021.
    • Sears Hometown and Outlet Stores – Spun off from Sears in 2012 and partially reacquired by the reorganized company in 2019. The Sears Hometown brand was retained while the Outlet division was divested.
      • Sears Appliance and Hardware Store – These hardware outlets specialized in carrying the full range of Sears hardware and appliance products. Their website was discontinued sometime after October 2019.
      • Sears Outlet Stores – Outlet-format Sears department stores located throughout various U.S. retail centers and online. This business was sold to Franchise Group, Inc. in October 2019.
    • Innovel Solutions – Formerly known as Sears Logistics, this division served as the supply chain operation for Sears Holding Company and provided services to clients such as Costco, the Air Force Exchange, Navy Exchange, and former Lands' End brand. Innovel specialized in storage and transportation of large items including furniture and appliances, offering final-mile delivery with installation and white-glove service across the United States and Puerto Rico. The company was acquired by Costco on March 17, 2020.
    • Wally Labs – Established after Sears Holdings acquired WallyHome sensor technology rights from SNUPI Technologies in 2015, this subsidiary focused on home security, safety, and loss prevention technologies. By May 2022, Wally Labs’ website was no longer accessible.
    • Sears Auto Centers – This subsidiary provided tire and battery sales along with basic automotive maintenance services. It ceased operations in January 2022.
    • Monark Premium Appliances – Created by Sears Holding Company in 2015 as premium appliance showrooms tailored for architects, builders, designers, developers, and homeowners. In late August 2022, Monark’s California and Nevada locations were acquired by Ferguson plc while its Florida outlets were closed permanently.

Sears Hometown division

  • Sears Hometown – previously retailed home appliances, lawn and garden tools, clothing, mattresses, sporting goods, and hardware. Each location within this segment was independently owned and managed by separate franchise operators.
    • Sears Hometown Store – outlets that offered Sears-branded merchandise.
    • Sears Home Appliance Showroom – dedicated showrooms showcasing home appliances on-site.Template:Fix/category[clarification needed]

Third-party operated affiliated brands

Independent enterprises delivering services under the Sears brand umbrella:

  • Sears Credit Card – Since 2003, the Sears credit card and Sears MasterCard have been owned and managed by Citibank. In February 2025, Citibank informed Sears Mastercard holders that their Sears-branded cards would transition to the Citi ThankYou Mastercard. Post-April 2025, Citibank will cease any association with Sears.
  • Sears Flowers – an online floral and gift service operated by Teleflora, offering same-day delivery of flowers, plants, and gifts through the Teleflora network. The website was discontinued sometime after July 2021.
  • Sears Optical – a licensed brand run by Luxottica until February 2020. Services included comprehensive eye exams, contact lenses, diagnosis and treatment of eye conditions, urgent care, cataract and glaucoma surgery consultations/referrals, low vision therapy, and eyeglass dispensing. Luxottica ended its partnership with Sears and closed all Sears Optical locations by February 2020.
  • Sears Travel – an internet-based travel agency managed by International Cruise & Excursion Gallery that provided booking services via phone and online through the SearsTravel.com portal. This service ceased operations on July 31, 2020.

Sears Holdings

In March 2019, Sears Holdings initiated legal action against Transform Holdco, seeking $57.5 million allegedly owed from the transaction. Additionally, Sears Holdings claimed that Transformco was responsible for $41.3 million related to credit card and cash sales conducted prior to the deal's finalization, along with $16.2 million for part of the rent due in February.

A court hearing on this dispute was scheduled for March 21, 2019. The case concluded in January 2020 with Transformco agreeing to pay $18.3 million to the bankrupt Sears Holdings estate, a sum partially distributed to Sears' creditors.

Bangladeshi suppliers

In June 2020, nineteen suppliers from Bangladesh filed a lawsuit against Transformco demanding $40 million in damages for orders that had been canceled despite already being shipped and held in U.S. warehouses. This legal matter was resolved through an out-of-court settlement in January 2021, with Transformco paying $6.3 million.

Sears Hometown related lawsuits

In December 2024, a trustee representing Sears Hometown Stores brought forth a lawsuit against Transformco and other entities under Eddie Lampert’s control, seeking $177 million.

Furthermore, on February 13, 2025, minority shareholders of Sears Hometown and Outlet Stores, Inc. filed suit against Transform Holdco LLC and Edward "Eddie" S. Lampert in the Delaware Court of Chancery. The claim alleges inadequate compensation for their shares during Transformco’s 2019 acquisition of Sears Hometown and Outlet Stores and asserts that their shares became worthless following Hometown’s bankruptcy filing in 2022.

References

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  20. ↑ Lua error in Module:Citation/CS1/Configuration at line 2123: attempt to index field '?' (a nil value).

External links

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